As an independent ERP consulting firm, the manufacturing and distribution teams we speak with are concerned about the maturity of ERP systems in their organizations.
ERP health and maturity are concerns that come up often as project teams look to Ultra to understand the best way to work through enterprise system selection to improve key processes – and to understand if they can cope with the demands of today’s business with a legacy solution.
We encourage teams to have a clear view of the systems that run our businesses especially if they may be “getting up there” in age.
Why Check the Health of Your ERP System?
Why is it important to assess the health of your ERP system? Because the results reveal the capabilities of the technology you lean on to drive the performance of your business.
Your ERP system is at the core of your business. Taking measure of its maturity and performing an ERP health check can provide your company with an evaluation of the value of and risks within your system, and an assessment of your company’s overall performance.
Manufacturers and distributors that relay on out-of-date, legacy ERP solutions are potentially exposing their companies to avoidable risks. It’s critical to have an accurate evaluation of the ERP health of a company to determine if it’s time to evaluate and select a new solution. By taking time to assess health, a company decision maker will have a more informed perspective on the relative viability of their current ERP solution.
But how do you begin and what factors must be accounted for and measured to help you decide if it’s the right time to move forward with a new or upgraded system? The role of an ERP consultant can add some clarity.
5 Steps to Check the Health of Your ERP System
If you are part of an ERP project team, the decision may already be made about your ERP system: You’re sticking with your current system, or you’re starting an ERP selection upgrade or replacement. Therefore, the necessity of a health check for either of these scenarios at first glance may look avoidable.
However, a thorough examination that works through five steps – including value and risk – can determine if your company is being held back by an out-of-date legacy ERP system, and what risk management steps your company needs to take to go beyond those that account for daily maintenance or disaster recovery:
1: Value – In an ERP health check, your initial questions about your system must relate to value. Specifically:
- What is the value that our current ERP system is providing?
- What is the value of a new ERP system?
- Can our existing ERP system match the value of the new ERP?
- Is our business being held back by the lack of an ERP system or one that is up-to-date?
2: Risk – Questions on risk regarding ERP are often led by the system “going down” or disaster recovery; questions of business continuity and catastrophic failure are important to address to be sure. However, there are five risks other than these that are far often more damaging to a company and occur with far greater frequency, therefore deserve equal if not greater questioning in an ERP health check:
- System and hardware health
- Vendor support
- IT staff’s ability to support the system
- Government regulations
- Company Risk – Who is the ERP vendor you are buying from? Will they make a good partner? How many years have they been in business, and how many years has the application been sold in the market?
3: Cost & Contracts – The health of your ERP system must take into account the resources and investment needed to take on a project. Considering direct and indirect costs, an ERP system represents a major investment in capital expenses and resources. What is the system cost and your company’s expenditure (time, resources, change management, training) in an apples-to-apples comparison?
4: Technology & Platform Risk – A wealth of questions should be asked about the underlying technology, such as the database structure, as well as the delivery model, since a vendor’s current and future cloud offering is critical for the future of both domestic and international business. As business improvement consultants, we hear all about these issues related to technology and platform risk.
5: Implementation & Support Risk – When assessing the health of your ERP system, key questions include: Will the implementation be led by a systems integration partner or directly by the vendor, and do they have experience in your industry? Also questions covering support during and after implementation are critical to ask.
Resources to Check the Health of Your ERP System
Ultra has helped several hundred manufacturing and distribution companies put in place a sound and comprehensive method of examining and preparing their enterprise systems and people for a major project.
As independent consultants serving manufacturers and distributors, we’ve seen that outdated enterprise technology hinders business process improvements.
To help assess ERP health, take a moment to explore these informative resources.
- ERP Health Check Survey: Take a survey to see if your company is being held back by an out-of-date legacy ERP system.
- On-Demand Webinar: View an on-demand webinar to help you assess the maturity and health of your system.
- ERP Maturity White Paper: For even more detail, download the paper “ERP Maturity and Health: Is Your Business at Risk with Your Legacy System?”
Concerned about the health of your ERP system? Contact Ultra for the best way to go forward.